India’s consumers, whose spending helped see the country through the global financial crisis in 2008, are closing their wallets and squeezing companies from carmakers to shampoo sellers who seem unable to cope up with the rupee’s free fall.
Companies that import finished goods or raw materials are the worst hit as they scramble to hold onto margins without deterring buyers. Videocon which imports raw materials is planning to raise prices by about 4% to 5% in the coming days, its second hike in 2 months.
“We are now planning for a month or three months at best unlike six months or a year earlier,” said Shantanu Dasgupta, vice-president for corporate affairs and strategy, Whirlpool India.
A survey by the Associated Chambers of Commerce and Industry in June found monthly bills for the middle class jumped by 15 to 20% in a month across major cities as the falling rupee drove up prices of petroleum products and edible oil.
Even five-star hotels and fine-dining restaurants registered a sales decline of 20% in the past three months after prices of imported food ingredients and spirits rose.
Hindustan Unilever’s outlook was glum for its fifth consecutive quarter in June while apparel retailer Provogue has shut several stores in the past year, moving cautiously on expansion. Future Group, meanwhile, is trying to reduce its Rs 400-crore debt by offloading stakes in fashion brands to strategic and private equity players. Only the present scenario does not seem to be helping their case.